Bangladesh requires the payer to deduct tax at source on most business payments, deposit it with the NBR (National Board of Revenue) by the 15th of the following month, and file a withholding return every quarter by the 25th of the month after quarter end.
The rates that catch most companies: 10% on rent, 10% on interest to a non-bank, 7.5% on consultancy paid to a firm and 15% if paid to an individual, 5% on general contractor and supplier payments, and 15% or 20% on dividends depending on who receives them.
One rule sits above all of them. If your resident payee can’t produce proof of return submission, the rate goes up by 50%.
How withholding works, and who carries the risk
The obligation sits with the payer, not the recipient. You deduct, you deposit, and you answer for it if the deduction was missed.
The penalty is not a fine on the tax. The whole expense gets disallowed in your income tax computation. Miss the 10% deduction on BDT 60 lakh of annual rent and the NBR adds the full BDT 60 lakh back to your taxable income, not the BDT 6 lakh you failed to deduct.
3 practical dates run the process:
- Deduct when the payment is credited or paid, whichever happens first
- Deposit with the NBR by the 15th of the following month
- File the withholding return quarterly, by the 25th of the month after the quarter ends
Anyone required to deduct or collect must hold a Withholder Identification Number, which has now been replaced by the Tax Identification Number.
The 50% loading for a missing PSR
Where the payee is a resident and fails to give you proof of submission of return (PSR), the applicable rate rises by 50% of itself.
A 10% rate becomes 15%. A 5% rate becomes 7.5%. The loading doesn’t apply to payees who are exempt from filing a return in the first place.
Collect the PSR before you release the first payment, not at year end. A vendor who has gone quiet in March is not going to hand over a certificate in June, and the extra deduction comes out of your margin if you have already paid them in full.
TDS rates on services
The split between an individual and an entity matters here, and it moves the rate by a wide margin.
| Service | Rate |
|---|---|
| Advisory, consultancy or professional service paid to an individual | 15% |
| Advisory, consultancy or professional service paid to a firm or company | 7.5% |
| Technical service, technical know-how or technical assistance paid to an individual | 15% |
| Technical service, technical know-how or technical assistance paid to a firm or company | 10% |
| Cleaning, personal security, manpower supply, creative media, print and electronic media agency | 10% on commission, or 1% on gross bill |
| Catering, public relations, event management, training or workshop management, courier, packing and shifting, recovery or collection agency | 2% on gross bill |
| Indenting commission | 7.5% |
| Meeting fees, training fees or honorarium | 20% |
| Mobile network operator, technical support service provider | 10% |
| Credit rating agency | 10% |
| Motor garage or workshop | 5% |
| Private container port or dockyard service | 5% |
| Shipping agency commission | 10% on commission, or 1% on gross bill |
| Freight forward agency | 10% on commission, or 1% on gross bill |
| Radio or TV operator, berth operator, terminal operator, ship leasing operator | 10% on commission or fee, 5% on gross amount |
| Sharing economy platforms: transport, car rental, ride sharing, repair and maintenance, co-working space, housing provision | 2% |
| Wheeling charge for electricity transmission | 3% |
| Internet service | 5% |
| Agent, distributor or channel partner of a mobile financial service provider | 10% |
| Any other service not listed above and not deductible under another section | 10% |
Where a bill states both a commission and a total amount, the deduction is the higher of the 2 calculations: the rate applied to the commission, or the rate applied to the total bill. Vendors sometimes present the bill in whichever way produces the smaller deduction. The law asks for the larger one.
TDS rates on contractors and suppliers
Supply payments are rated by what is being supplied, and the spread runs from 0.5% to 10%.
| Nature of supply | Rate |
|---|---|
| MS billet production, locally procured MS scrap | 0.5% |
| Basic food commodities, seeds, jute, cotton, raw hides, organic fertiliser and pesticides (a long prescribed list) | 0.5% |
| Gold, silver, gold ornaments, precious stones, diamonds | 0.5% |
| Oil supplied by oil marketing companies | 0.6% |
| Gas distribution | 0.6% |
| Oil supplied by a dealer or agent of an oil marketing company | 1% |
| Yarn | 1% |
| Oil supplied by an oil refinery | 1% |
| Recycled plastic, polythene, battery, lead, electrical, electronics, paper, glass | 1% |
| Sub-contracts from 100% export-oriented garment industries | 1% |
| Raw materials for recycling industries | 1.5% |
| Fruits, including dates | 2% |
| Cement, iron and iron products, ferro alloy products other than MS billets | 2% |
| Gas transmission | 3% |
| Raw materials and packing materials used in industrial production | 3% |
| Books supplied to a non-government buyer | 3% |
| Recycled lead | 3% |
| 33KV to 500KV extra high voltage power cable from a local manufacturer with its own vertical continuous vulcanisation line | 3% |
| Manufacturing, process or conversion, construction, engineering or similar work | 5% |
| Any item not covered above | 5% |
| Tobacco products, including cigarettes, bidis, jarda, tobacco leaves, gul | 10% |
When you can’t place a supply in the list, the answer is 5%. That default catches most ordinary vendor payments.
Rent, interest, dividends and commission
These are the rows that appear in almost every company’s monthly schedule.
| Payment | Rate |
|---|---|
| Rent for house property, hotel or guest house, vacant premises, plant or machinery, or a building used entirely as a warehouse | 10% |
| Renting a convention hall, conference centre, hall, community centre or restaurant space | 10% |
| Interest paid to a person other than a bank or financial institution | 10% |
| Interest on saving deposits and fixed deposits, where the payee is a company, trust or association of persons | 20% |
| Interest on saving deposits and fixed deposits, any other payee | 10% |
| Interest on securities, and interest on saving instruments | 10% |
| Dividend to a resident natural person | 15% |
| Dividend to a resident payee that is not a natural person | 20% |
| Commission, discount or fees | 10% |
| Commission paid for promotion to a person engaged in distribution or marketing | 1.5% |
| Goods sold to a distributor below retail price under contract | 0.25% |
| Royalty, franchise, licence, trademark, patent, copyright, industrial design or other intellectual property | 10% |
| Payment to a newspaper, magazine, private TV channel or radio station for advertisement, other than through a media buying agent | 5% |
| Letter of credit commission | 5% |
| Commission or remuneration to the agent of a foreign buyer | 7.5% |
| Payment to a WPPF beneficiary | 10% |
| Transfer of shares from one resident to another | 15% |
| Purchase of electricity | 3% |
| Export cash subsidy | 5% |
Local letter of credit sits on its own scale: 3% in the ordinary case, 1.5% for distributor financing, 2% for general products and computer accessories, 1% for yarn, and 0.5% for the prescribed food and agricultural list.
TDS on payments to non-residents
Payments leaving Bangladesh carry their own schedule, and the rates run considerably higher than the resident equivalents.
| Payment to a non-resident | Rate |
|---|---|
| Advisory, consultancy or professional service, individual | 20% |
| Advisory, consultancy or professional service, other than individual | 10% |
| Technical service, know-how or assistance, individual | 20% |
| Technical service, know-how or assistance, other than individual | 10% |
| Royalty, licence fee or payment relating to intangibles | 20% |
| Legal service | 20% |
| Event management | 20% |
| Pre-shipment inspection service | 20% |
| Satellite, airtime or frequency charge, channel broadcast rent | 20% |
| Architecture, interior, landscape, fashion or process design | 15% |
| Certification and rating | 15% |
| Commission | 15% |
| Advertisement broadcasting | 15% |
| Advertisement making or digital marketing | 10% |
| Capital gains | 15% |
| Survey for coal, oil or gas exploration | 15% |
| Interest | 10% |
| Bandwidth payment | 10% |
| Courier service | 10% |
| Rental of machinery or equipment | 7.5% |
| Contractor, sub-contractor for manufacturing, process, construction, engineering or similar work | 6% |
| Supplier | 6% |
| Air or water transport, outside sections 259 and 260 | 6% |
| Insurance premium | 5% |
| Petroleum exploration or drilling, surveyor fees, oil or gas field connection services | 5.25% |
| Dividend to a company, fund or trust | 20% |
| Dividend to any other non-resident person | 25% |
| Artist, singer or player | 30% |
| Salary or remuneration | 30% |
| Any other payment | 20% |
Where the non-resident payee has no permanent establishment in Bangladesh, the tax deducted is treated as their final liability on that income and cannot be set off against any claim.
Treaty rates, and the certificate you need to use them
Bangladesh has double taxation agreements with around 40 countries, and most reduce the withholding on dividends, interest and royalties from the 20% or 30% non-treaty position.
| Country | Dividend | Interest | Royalty |
|---|---|---|---|
| Non-treaty | 20% or 30% | 20% | 20% |
| China | 10% | 10% | 10% |
| India | 10% or 15% | 10% | 10% |
| Japan | 10% or 15% | 10% | 10% |
| Korea | 10% or 15% | 10% | 10% |
| Singapore | 15% | 10% | 10% |
| United Kingdom | 10% or 15% | 7.5% or 10% | 10% |
| United States | 10% or 15% | 10% | 10% |
| Germany | 15% | 10% | 10% |
| Netherlands | 10% or 15% | 10% | 10% |
| UAE | 5% or 10% | 10% | 10% |
| Mauritius | 10% | Not taxable | Not taxable |
The lower dividend figure in each pair applies where the beneficial owner is a company holding a minimum slice of the paying company’s capital. The threshold differs by treaty, commonly 10% or 25%, and several treaties add a 365-day holding requirement. Read the specific article before you rely on the lower rate.
The reduced rate is not automatic. Apply to the NBR with the supporting documents, and the NBR issues a certificate within 30 days confirming that the payment may be made without deduction or at the reduced rate. Deduct at the full rate until that certificate is in hand.
Payments to non-residents that carry no withholding
Subject to conditions, these fall outside the net:
- Payment to a government authority of a foreign state
- Subscription fee to an internationally recognised professional body
- Liaison office or branch office expenses
- International marketing and product development expenses
- Tuition fees routed through an authorised dealer bank under foreign exchange rules
- Security deposits, arbitration fees, Hajj payments and priority pass
The liaison and branch office exemption is worth knowing if you fund a representative office from head office. What it does not do is remove the office’s own obligation to deduct on salaries and vendor payments inside Bangladesh, which is covered in liaison office compliance.
4 mistakes we correct most often
1. Deducting 5% on rent instead of 10%
Rent is among the most examined categories in an NBR assessment, and the rate on house property, warehouse, plant and machinery is 10%. A company deducting 5% carries an exposure equal to the whole year’s rent being added back, not the shortfall.
2. Applying one flat rate to all consultants
Consultancy paid to an individual is 15%. The same work billed by a firm is 7.5%. Companies that apply a single rate across the ledger are wrong in one direction or the other, and both directions cost money.
3. Treating the withholding return as monthly
The deposit is monthly, by the 15th. The return is quarterly, by the 25th after quarter end. Teams that built their calendar on the older monthly return cycle end up filing late.
4. Paying vendors before collecting the PSR
No proof of return submission means the rate rises by 50%. Once the vendor has been paid in full, recovering that difference is a conversation you will probably lose.
Getting the deduction right every month
TDS is not a year-end exercise. It’s a monthly reconciliation between your payables ledger and a rate schedule with more than 60 lines, and the cost of being wrong lands on your corporate tax computation rather than on the deduction itself.
We run monthly TDS deduction, deposit and quarterly return filing for clients under the KAC Corporate Compliance Architecture, alongside the bookkeeping that feeds it through outsourced accounting.
Rates are one half of the picture. Your corporate rate sits in corporate tax rates in Bangladesh, the filing deadlines and penalties in private limited company compliance, and every statutory date for the year in the compliance calendar.
For a review of your current deduction schedule, see tax services or talk to our team.
Rates reflect the schedule applicable for the current assessment year. Withholding rates change with each Finance Act. Confirm your position with a qualified adviser before deducting.
Frequently asked questions
What is the TDS rate on rent in Bangladesh?
10% on rent for house property, hotel or guest house, vacant premises, plant or machinery, and any building used entirely as a warehouse. Renting a convention hall, conference centre, community centre or restaurant space is also 10%. Rent is among the most closely examined categories in an NBR assessment.
When is TDS deposited and when is the withholding return filed?
Tax deducted must be deposited with the NBR by the 15th of the following month. The withholding return is filed quarterly, by the 25th of the month after each quarter ends. The deposit cycle is monthly while the return cycle is quarterly.
What happens if a vendor cannot provide proof of return submission?
The applicable withholding rate increases by 50% of itself. A 10% rate becomes 15% and a 5% rate becomes 7.5%. The loading does not apply to payees legally exempt from filing a return. Collect the PSR before releasing payment, not afterwards.
What is the TDS rate on dividends in Bangladesh?
15% where the resident recipient is a natural person, and 20% where the recipient is not a natural person. For non-residents it is 20% to a company, fund or trust and 25% to any other person, subject to reduction under an applicable double taxation agreement.
Can a non-resident claim a lower TDS rate under a tax treaty?
Yes, but not automatically. Apply to the NBR with supporting documents, and it issues a certificate within 30 days confirming exemption or the reduced rate. Deduct at the full statutory rate until that certificate is issued, since the payer carries the liability for any shortfall.
